Department of Justice launches probe of Entergy

Transmissions systems and fuel-purchasing practices being investigated

The U.S. Department of Justice is investigating Entergy Corporation’s transmissions system and electricity-purchasing practices.

The New Orleans-based company disclosed the investigation prior to the opening of financial markets Tuesday.

Entergy says the investigation involves Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy Texas and Entergy New Orleans. The investigation also covers Entergy Services Inc.

The DOJ investigation involves power procurement, dispatch and transmission system practices, along with utility policies, according to Entergy.

Entergy says it believes its operations “have satisfied all applicable laws and regulation” – and the company is cooperating with the probe.

Late last week Entergy notified state regulators in Texas, Arkansas and Mississippi about the investigation, said Mississippi Public Service Commissioner Brandon Presley. The Louisiana Commission was not informed until Tuesday.

Within the past two years, at least two other parties have also criticized Entergy’s transmissions system and implied that the utility has defrauded ratepayers.

Mississippi Attorney General Jim Hood filed a lawsuit against Entergy in December 2008 claiming the utility illegally manipulated the purchase and the sale of electricity to maximize profits. The case is pending a U.S. District Court decision about whether it will be tried in federal or state court. Entergy has denied any wrongdoing.

This year regulators from four states who believe the company needs to improve its transmissions system and provide cheaper electricity to ratepayers formed the Entergy Regional State Committee (E-RSC). The group regularly meets with Entergy representatives and stakeholders to discuss operations of and upgrades to the system. Presley is the E-RSC member representing Mississippi.

A public electric utility such as Entergy is a monopoly regulated by the state Public Service Commission. The company is obligated to provide electricity at the lowest possible rates to its customers.

Entergy owns its own power plants and transmissions lines, which are the power highways that distribute electricity to customers. Critics claim that the company has neglected improvements to its transmissions lines, which has at times kept lower priced electricity from reaching customers.

Independent Power Producers (IPPs) that own their own power plants but not transmissions lines must pay to use a utility’s system to deliver their power to the open market. Without room on the transmissions system, an IPP cannot ship and sell its power.

Sometimes, IPPs, which often have newer facilities, can produce electricity more efficiently and cheaply than aging utility-owned plants.

Entergy Mississippi provides electricity to more than 433,000 customers in 45 western Mississippi counties. Entergy Corporation as whole delivers power to 2.7 million people in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of more than $10 billion and more than 15,000 employees.

Commissioner Letter to Entergy Preceeded Company Press Release

Brandon Presley letter to Entergy

On Monday Commissioner Presley requested that Entergy file a copy of the letter issued to them by the DOJ regarding the investigation with the Mississippi Public Service Commission.

Entergy distributed a press release confirming the investigation Tuesday.

Presley’s letter states that Entergy has been aware of the investigation for approximately three weeks. Entergy has said the company has known of the probe since Sept. 24, according to the Associated Press.

The Louisiana Public Service Commission was informed of the investigation Tuesday, but Entergy should have informed the PSC immediately after receiving formal notification from the DOJ, said PSC member Foster Campbell, according to the AP.

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